March 18, 1998
Dear Stockholder:
The Annual Meeting of Stockholders will be held on April 23, 1998,
at the IBP headquarters in Dakota City, Nebraska. IBP's annual meeting is
very short and is limited to those activities that are formally required.
Based on the limited nature of the annual meeting, and the fact that a
large majority of the Company's shares are held by institutional
investors, very few stockholders attend the meeting. The Company
encourages stockholders to read the proxy statement and annual report and
to vote shares by the enclosed proxy card.
Since the agenda of the meeting is limited to only those matters
that are legally required, the Company does not feel the annual meeting is
the best or most efficient way to get information to stockholders. To
obtain current information regarding IBP, the Company encourages investors
to call the Investor Relations Department and receive a recorded message
of IBP's recent press releases. If access to a facsimile machine with a
polling feature is available, copies of IBP's most recent earnings
release, Annual Report, 10-K, 10-Q, Proxy Statement or IBP Fact Sheet may
be received by facsimile transmission. The number to call for either
service is (800) 416-1027, then choose the appropriate option. You may
also visit IBP's Internet address at www.ibpinc.com.
Sincerely,
/s/ Robert L. Peterson
---------------------------
Robert L. Peterson
Chairman of the Board
and Chief Executive Officer
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities and Exchange Act
of 1934
(Amendment No. )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only [as permitted by Rule
14a-6(e)(2)]
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
( IBP, inc. )
Payment of Filing fee (check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
_______________________________________
2) Aggregate number of securities to which transaction applies:
_______________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it is determined):
_______________________________________
4) Proposed maximum aggregate value of transaction:
_______________________________________
5) Total fee paid: _______________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: __________________
2) Form, Schedule or Registration No.: ____________________________
3) Filing Party: __________________________________________________
4) Date Filed: __________________________
IBP, inc.
IBP Avenue
Post Office Box 515
Dakota City, NE 68731
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held April 23, 1998
To the Stockholders:
The Annual Meeting of Stockholders of IBP, inc. will be held in the
training room of the corporate headquarters located on IBP Avenue in
Dakota City, Nebraska, on Thursday, April 23, 1998, at 3:00 p.m. Central
Daylight Time for the following purposes:
1. To elect ten directors to serve for one year terms expiring at
the annual meeting in 1999 and until their successors are elected and
qualified; and
2. To transact such other business as may properly come
before the meeting or any adjournment thereof.
Only stockholders of record at the close of business on March 16,
1998 will be entitled to notice of and to vote at the meeting.
In order to assure a quorum, all stockholders are urged to vote by
proxy or attend the meeting. Whether or not you expect to attend, we urge
you to read the accompanying proxy statement and then complete, sign, date
and return the proxy card in the enclosed postage prepaid envelope. It is
important that your shares be represented at the meeting. Your promptness
will assist us in preparing for the meeting and avoiding the cost of a
follow-up mailing. If you receive more than one proxy card because you
own shares registered in different names or at different addresses, each
proxy card should be completed and returned.
/s/ Robert L. Peterson
- - ------------------------
Robert L. Peterson
Chairman of the Board
Dakota City, Nebraska
March 18, 1998
IBP, inc.
IBP Avenue
Post Office Box 515
Dakota City, NE 68731
PROXY STATEMENT
GENERAL INFORMATION
The enclosed proxy card, IBP's Annual Report to Stockholders and
this proxy statement have been mailed to stockholders on or about March
18, 1998, in connection with the solicitation of proxies by the Board of
Directors of IBP, inc. ("IBP") for use at the Annual Meeting of
Stockholders. The Annual Meeting of Stockholders will be held in the
training room of the corporate headquarters located on IBP Avenue in
Dakota City, Nebraska, on April 23, 1998, at 3:00 p.m. Central Daylight
Time. Stockholders of record at the close of business on March 16, 1998,
are entitled to notice of and to vote at the meeting and at any
adjournment thereof. As of the close of business on March 10, 1998, IBP
had outstanding 92,557,051 shares of Common Stock, each of which is
entitled to one vote.
Unless instructed otherwise, the persons named as proxies intend to
vote shares of Common Stock represented by duly executed proxies FOR the
election of the nominees for director selected by the Board of Directors.
If any other business is properly brought before the annual meeting, the
proxies will be voted in accordance with the discretion of the persons
named as proxies. Any proxy may be revoked by the stockholder at any time
prior to the voting of the proxy at the meeting by a written revocation
received by the Secretary of IBP, by properly executing and delivering a
later-dated proxy or by attending the meeting and requesting the return of
the proxy and voting in person.
A majority of the outstanding shares of Common Stock must be
represented at the annual meeting in person or by proxy in order to
constitute a quorum for the transaction of business. The record holder of
each share of Common Stock as of March 16, 1998, will have one vote for
each share so held.
Directors are elected by a plurality of the votes cast.
Stockholders may not cumulate their votes. The ten candidates receiving
the highest number of votes will be elected as directors. Under Delaware
law, and IBP's Bylaws, abstentions and broker non-votes are not counted
and have no effect on the tally as to which of the ten candidates have
received the highest number of votes and are elected as directors, except
that the withholding or abstention of a vote denies the candidate that
vote. Under certain conditions, if you do not exercise the voting rights
of stock in which you hold the beneficial interest, those shares might be
voted by the record owner.
Solicitation of Proxies
The expense of this solicitation will be paid by IBP. To the extent
necessary to assure sufficient representation at the meeting, proxies may
be solicited by any appropriate means by officers, directors and regular
employees of the Company for which they will receive no additional
compensation. IBP will retain the services of Corporate Investor
Communications at a cost of approximately $6,000 plus certain mailing
costs, to deliver proxy material and to aid in the solicitation of proxies
to ensure that a quorum is represented at the annual meeting. IBP will
reimburse persons holding stock in their names or the names of their
nominees, but not owning such stock beneficially, such as brokerage
houses, banks and other fiduciaries, for the expense of forwarding
soliciting material to their principals.
Stockholder Proposals for 1999 Annual Meeting
In the event that any stockholder desires to submit a proposal for
action at the 1999 Annual Meeting of Stockholders, such proposal must be
received at IBP's principal offices at IBP Avenue, Post Office Box 515,
Dakota City, Nebraska 68731, marked to the attention of the Secretary of
IBP, no later than November 17, 1998. It is suggested that any
stockholder desiring to submit a proposal do so by Certified Mail, Return
Receipt Requested. Stockholders should also note that, in addition to the
requirement of timely receipt by IBP of a proposal, a proposal must comply
with the requirements of Section 14(a) of the Securities Exchange Act of
1934 to be included in the proxy solicitation material for the 1999 Annual
Meeting of Stockholders.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of March 10, 1998, to the knowledge of IBP, no person
beneficially owned 5% or more of any class of the outstanding voting
securities of IBP, except as follows:
Name and Address of Amount and Nature Percent of
Title of Class Beneficial Owner of Beneficial Class (%)
Ownership (#)
- - -------------- ------------------- ------------------- -----------
Common Stock Archer-Daniels-
Midland Company ("ADM") 9,734,500 (1) 10.6%
4666 Fairies Parkway
Decatur, IL 62526
Common Stock Franklin Resources, Inc. 9,237,119 (2) 10.0%
777 Mariners Island Blvd.
San Mateo, CA 94403
Common Stock Pioneering Management 8,047,200 (3) 8.69%
Corporation
60 State Street
Boston, MA 02109
(1) According to ADM's Form 4 dated March 3, 1998, which was filed with the
Securities and Exchange Commission ("SEC"). ADM has sole investment power
and sole voting power over such shares.
(2) Franklin Resources, Inc. has sole investment power over 9,237,119
shares, and sole voting power over 9,195,118 shares, according to its
Schedule 13G dated January 30, 1998, and filed with the SEC.
(3) Pioneering Management Corporation has sole investment power over
8,047,200 shares, and sole voting power over 8,047,200 shares, according
to its Schedule 13G dated January 21, 1998, and filed with the SEC.
ELECTION OF DIRECTORS
It is intended that proxies received will be voted FOR the election
of ten nominees as directors unless authority to so vote is withheld.
Although the Board of Directors does not know of any reason why any
nominee will be unavailable for election, in the event any nominee should
be unavailable at the time of the meeting, the proxies may, but need not,
be voted for a substitute nominee selected by the Board of Directors.
The Bylaws of IBP provide that any stockholder entitled to vote for
the election of directors at a meeting may nominate persons for election
as directors by giving timely notice in proper written form, containing
the information required by the Bylaws, to the Secretary of IBP. To be
timely, such notice must be delivered to or mailed to and received at the
principal executive offices of IBP not less than 30 nor more than 60 days
prior to the meeting. However, if less than 40 days' notice or public
disclosure of the date of the meeting is given or made to stockholders,
notice by the stockholder to be timely must be so received not later than
the close of business on the tenth day following the day on which such
notice of the date of the meeting was mailed or such public disclosure was
made, whichever first occurs.
The following biographical information is furnished as of February
14, 1998, with respect to each of the ten nominees for election as
director at the annual meeting.
RICHARD L. BOND, 50 Director since 1995
Mr. Bond has served as the President and Chief Operating Officer of
IBP since March 1, 1997. Prior to that he was President, Fresh Meats
since 1995; Executive Vice President, Beef Division since 1994; and the
Group Vice President, Beef Sales and Marketing since 1989.
JOHN S. CHALSTY, 64 Director since 1987
Mr. Chalsty was elected Chairman of the Board of Donaldson, Lufkin &
Jenrette, Inc. ("DLJ") in February, 1996, and Chief Executive Officer in
September 1986. Mr. Chalsty also served as President of DLJ from 1986 to
1996, after having served as Chairman of DLJ's Capital Markets Group for
more than two years. He joined the firm in 1969 as an oil analyst. He
was elected to DLJ's Board of Directors in 1971 and was named Director of
Research in 1972. Mr. Chalsty was appointed head of the Investment
Banking Division in 1979. When the firm was reorganized in January, 1984,
Mr. Chalsty was named Chairman of the Capital Markets Group. Currently,
Mr. Chalsty is also a member of the Board of Directors of EQ, Occidental
Petroleum Corporation, and he has been a member of the Executive Committee
of AXA-UAP since January 1997. From 1990 to 1994 Mr. Chalsty served as
Vice Chairman of the New York Stock Exchange Inc.
DR. WENDY L. GRAMM, 53 Director since 1993
Dr. Gramm chaired the Commodity Futures Trading Commission from 1988
to 1993. She has served as Administrator for Information and Regulatory
Affairs at the White House Office of Management and Budget (OMB) and was
the Executive Director of the Presidential Task Force on Regulatory
Relief. Dr. Gramm also directed the Federal Trade Commission's Bureau of
Economics. She holds a Ph.D. in economics from Northwestern University
and began her career as a professor of economics at Texas A&M University.
Dr. Gramm is an economist. She serves on the Board of Visitors of the
Center for Study of Public Choice at George Mason University, the National
Advisory Boards of the Independent Women's Forum, and the International
Republican Institute. She has also been named to the Boards of Directors
of Enron Corporation, State Farm Insurance Companies, the Chicago
Mercantile Exchange, and Invesco Funds.
JOHN J. JACOBSON, JR., 54 Director since 1998
Mr. Jacobson is the President of TransAm Trucking, Inc. ("TransAm")
which he founded in 1987. For a twenty year period prior to 1987, Mr.
Jacobson was a member of the Board of Directors and an Executive Vice
President of Idlewild Foods, Inc., a holding company which controlled
National Beef Packing, Co., a beef products company; Liberal International
Sales, an export sales company of meat and by-products; and Supreme
Feeders, a commercial cattle feeding operation. Mr. Jacobson occupied
executive positions in all of the companies controlled by Idlewild Foods,
Inc. In addition, Mr. Jacobson was the President and founder of National
Carriers, the nation's third largest refrigerated carrier. TransAm is one
of the carriers that provides services to IBP, and, in 1997, approximately
15% of TransAm's revenues were derived from services provided to IBP.
EUGENE D. LEMAN, 55 Director since 1989
Mr. Leman has served as the President, Fresh Meats of IBP since
March 1, 1997. Prior to that he was the President, Allied Products since
1995; and the Executive Vice President, Pork Division since 1986.
DR. MARTIN A. MASSENGALE, 64 Director since 1996
Dr. Massengale has been President Emeritus; Director, Center for
Grassland Studies; and Foundation Distinguished Professor at the
University of Nebraska since 1994. From 1958 to 1976 Dr. Massengale was a
professor at the University of Arizona and the Associate Dean, College of
Agriculture, University of Arizona. From 1976 to the present he has been
with the University of Nebraska where he has served as a Vice Chancellor,
Chancellor Interim President and President of the University, a position
he held from 1991 to 1994. Dr. Massengale has been named to the Board of
Directors of Woodmen Accident & Life Company, the Board of Managers of
America First Companies, L.L.C., and the Board of Trustees of Great Plains
Funds.
ROBERT L. PETERSON, 65 Director since 1976
Mr. Peterson has served as Chairman of the Board and Chief Executive
Officer of IBP since August 12, 1981. Mr. Peterson joined IBP in 1961.
He left IBP in 1969 for a period during which he started a pork products
company, Madison Foods, Inc. He returned to IBP in 1976 when IBP acquired
Madison Foods, Inc. In 1977, he was elected IBP's President and Chief
Operating Officer. Mr. Peterson is a Director of MidAmerican Energy
Company and the Omaha Branch of the Federal Reserve Bank of Kansas City.
MICHAEL L. SANEM, 55 Director since 1998
Mr. Sanem has been self-employed as a cattle feeder and private
investor since 1994. Prior to this, Mr. Sanem was employed by Monfort of
Colorado as Vice President of Slaughter, Hides and By-Products Operations
from 1979 to 1982. In 1982, he was promoted to Group Vice President, and
in 1987, after ConAgra, Inc. acquired Monfort, he became Monfort's
Executive Vice President of Beef Operations. From 1989 to 1994, Mr. Sanem
was the President of Monfort, Inc., and was responsible for Monfort's
beef, lamb, trucking and specialty operations.
JOANN R. SMITH, 58 Director since 1993
Ms. Smith served as Assistant Secretary for Marketing and Inspection
Services for the United States Department of Agriculture (USDA) from 1989
to 1993, and has served in numerous capacities in the livestock industry.
She is a former President of the National Cattlemen's Association and has
chaired the Cattlemen's Beef Promotion and Research Board. She is on the
Board of Directors for Purina Mills, Inc. Ms. Smith acts as Secretary and
Treasurer for Smith Brothers, a farming and ranching operation, is the
Secretary and Treasurer for Smith Construction, and is President of Smith
Associates, an agricultural marketing business.
DALE C. TINSTMAN, 78 Director since 1962
Mr. Tinstman, a business consultant, is a Director of Smith Hayes
Trust, Inc. He served as a financial consultant for IBP before being
elected President and Chief Operating Officer in 1976, a position he held
until 1977. From 1977 to January 1981 he served as Vice Chairman of the
Board of IBP and in January 1981 became Co-Chairman of the Board, a
position he held until 1982.
Information Regarding the Board of Directors and its Committees
The Board of Directors has established an Audit Committee,
Compensation Committee, Executive Committee, Nominating Committee and
Plans Administration Committee.
The Board of Directors met five times during the 1997 fiscal year.
All directors attended at least 75 percent of the Board of Directors and
committee meetings for which they were eligible.
The Executive Committee, during the intervals between meetings of
the Board of Directors, exercises all powers of the Board of Directors,
except as otherwise provided by law and the IBP Bylaws. The members of
the Executive Committee currently are Messrs. Peterson (Chairman), Bond,
and Leman. The Executive Committee did not meet during 1997, however, it
did act by written consent of all members eight times in 1997.
The Audit Committee selects the firm of independent public
accountants to audit the financial statements of IBP and its consolidated
subsidiaries, subject to approval of the Board of Directors; discusses
with the independent public accountants the scope and results of their
audit; discusses with the independent public accountants, and with the
management of IBP, IBP's financial, accounting and reporting principles,
policies and practices; discusses with the independent public accountants,
and with the Controller of IBP and his staff, the adequacy of the
corporation's accounting, financial and operating controls; and reports to
the Board of Directors. The members of the Audit Committee currently are
Mr. Tinstman (Chairman), Mr. Chalsty, Dr. Gramm, Mr. Jacobson, Dr.
Massengale, Mr. Sanem and Ms. Smith. The Audit Committee held four
meetings during 1997.
The Compensation Committee reviews and approves compensation
arrangements, including annual incentive awards, for officers of IBP. The
members of the Compensation Committee currently are Mr. Chalsty
(Chairman), Dr. Gramm, Mr. Jacobson, Dr. Massengale, Mr. Sanem and Ms.
Smith. The Compensation Committee held two meetings during 1997.
The Nominating Committee makes recommendations as to candidates for
election to the Board of Directors and their qualifications to fill board
vacancies in connection with proposed slates of nominees for directors for
whose election proxies will be solicited by the Board of Directors. The
Nominating Committee will consider properly submitted recommendations of
stockholders if the recommendation is submitted pursuant to the procedures
previously outlined. The members of the Nominating Committee currently are
Dr. Gramm (Chairperson), Mr. Chalsty, Mr. Jacobson, Dr. Massengale, Mr.
Sanem, Ms. Smith and Mr. Tinstman. The Nominating Committee held one
meeting during 1997.
The Plans Administration Committee administers the restricted stock
and employee stock option plans of IBP. The members of the Plans
Administration Committee currently are Ms. Smith (Chairperson), Mr.
Chalsty, Dr. Gramm, Mr. Jacobson, Dr. Massengale and Mr. Sanem, none of
whom are eligible for selection as participants in these plans. The Plans
Administration Committee held one meeting during 1997.
Information Regarding Directors' Compensation
Officers of IBP who are also directors do not receive any fee or
remuneration for services as members of the Board of Directors or of any
committee of the Board of Directors. Non-management directors receive a
retainer fee of $25,000 per annum, $2,500 per annum for each committee
they chair and $1,000 for each board or committee meeting that they
attend. Non-management directors also receive stock options pursuant to
the IBP Directors Stock Option Plan.
In January 1993, IBP entered into a consulting agreement with Mr.
Tinstman. Mr. Tinstman agreed to continue to act as an independent
general consultant to IBP, which includes chairing the IBP Retirement
Savings Plan Administration Committee which administrates an Internal
Revenue Code Section 401(k) plan with in excess of $155 million of invested
funds. Pursuant to such agreement, Mr. Tinstman receives $3,000 per month
as long as the agreement is in effect. In addition, Mr. Tinstman is
entitled to hospitalization coverage and, subject to IBP's best efforts,
disability insurance. Mr. Tinstman also receives the annual fees and
meeting fees paid to non-management directors of IBP and stock options
pursuant to the IBP Directors Stock Option Plan.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of February 28, 1998, beneficial
ownership of IBP Common Stock, the sole class of IBP stock, for each
director of IBP, for each person nominated as a director of IBP, for each
executive officer named in the Summary Compensation Table and for all
directors and executive officers (including those executive officers not
named in the Summary Compensation Table) of IBP as a group. Unless
otherwise indicated, the persons named below have sole voting and
investment power with respect to the Common Stock shown as beneficially
owned by them.
Amount and Nature
Name of Beneficial Owner - of Beneficial Percent of
Position with IBP Ownership(#)(1) Class (%)(3)
- - -------------------------- ----------------- ------------
Richard L. Bond - Director
and Executive Officer 56,724 .06
John S. Chalsty - Director 8,600 *
R. Randolph Devening - Executive
Officer 0 0
Wendy L. Gramm - Director 3,200 *
John J. Jacobson, Jr.
Director 5,000 *
Eugene D. Leman - Director
and Executive Officer 121,217 .13
Martin A. Massengale - Director 700 *
Robert L. Peterson - Director
and Executive Officer 497,002 .54
Michael L. Sanem - Director 0 *
Larry Shipley - Executive
Officer 18,080 .02
JoAnn R. Smith - Director 4,800 *
Dale C. Tinstman - Director(2) 12,600 *
All Directors and Executive
Officers As A Group (19 Persons) 1,130,621 1.22
- - ---------------------------
(1) Includes the following shares which are subject to stock options
granted pursuant to the IBP 1987 Stock Option Plan, the IBP 1993 Stock
Option Plan, 1996 Stock Option Plan and the IBP Directors Stock Option
Plan, and which are exercisable as of February 28, 1998, or within 60 days
thereafter: Mr. Bond 48,392; Mr. Chalsty 3,600; Dr. Gramm 3,200; Mr. Leman
62,000; Mr. Massengale 400; Mr. Peterson 168,000; Mr. Shipley 18,080; Ms.
Smith 1,000; Mr. Tinstman 3,600 and all other Executive Officers 231,794.
(2) Includes 2,000 shares owned by Mr. Tinstman's wife, as to which Mr.
Tinstman disclaims any beneficial ownership.
(3) None of the directors or nominees for director beneficially own more
than 1% of IBP's Common Stock, and reporting their percentage of ownership
is not required.
JOINT REPORT OF THE COMPENSATION
AND PLANS ADMINISTRATION COMMITTEES
Compensation and Plans Administration Committees
The Compensation Committee of the Board of Directors is comprised
entirely of disinterested and outside directors. The Committee is
responsible for establishing the levels of compensation (except stock
option grants and long-term stock awards) for the executive officers of
the Company. The Committee annually evaluates IBP's performance and
compensation paid to its executive officers.
The Plans Administration Committee reviews and approves the grant of
stock options and awards of restricted stock pursuant to IBP's stock
option and long-term stock plans for the Company's officers and employees.
This committee is comprised entirely of disinterested and outside
directors.
Committees' Report on Executive Compensation
Base Salary
The annual compensation of executive officers of IBP includes a base
salary. The Compensation Committee from time to time uses outside
consultants and published compensation survey data to review competitive
rates of pay, to establish salary ranges and to set target base salary
levels for officers. The amount of the officer's base salary is a
function of the officer's position, and individual performance. The
officer's individual performance is measured against expectations related
to budgetary performance or operating income results and operating
performance standards.
Bonus Payments
The annual compensation of officers participating in IBP's
management bonus program, including executive officers, is dependent on
overall corporate performance. The dollar amount of the bonus pool from
which bonuses are paid is established as a percent of operating income as
adjusted for non-operating expenses such as pushdown accounting. Target
bonuses are based on the percent of increase or decrease in such operating
income from the prior year.
Stock Option Grants and Restricted Stock Awards
IBP has stock option plans for all of its management employees and a
long-term stock plan for its officers, including executive officers. The
purpose of the plans is to assist in securing and retaining employees of
ability by making it possible to offer them an incentive, in the form of a
proprietary interest in IBP, to join or continue in the service of IBP and
to increase their efforts on its behalf.
Levels for both stock option grants and restricted stock awards are
established by the Plans Administration Committee on the basis of an
employee's officer position or grade level. Stock options are typically
granted for terms of ten years and normally become exercisable in
increments beginning after the second and continuing through the fifth
year of the stock option term. The restricted stock awards are made
subject to continued employment, generally for five years.
Corporate Performance
In evaluating corporate performance to establish compensation for
fiscal year 1997, the Compensation Committee considered the fact that
operating income for 1996 for bonus purposes was down 35% from 1995 and
net earnings per share were down to $2.10 in 1996 from $2.72 in 1995. The
Compensation Committee established a standard salary increase budget of
3.5%, and an additional discretionary 0.5%, for a total salary increase
budget of 4% for fiscal year 1997 for officers. The budget percentage was
based on the standard percentage increase for all management employees of
the Company. Individual salary increases were determined for all
management employees, including executive officers, based on each
individual's contributions to operating unit and corporate performance.
Compensation of Chief Executive Officer
The Chairman and Chief Executive Officer's salary and performance-
based bonus for 1997 were established by the Compensation Committee in
December of 1994. Mr. Peterson's base salary remained at $1,000,000. His
performance-based bonus for 1997 was established at 1.448% (pursuant to
the five year formula approved by stockholders at the 1995 Annual Meeting)
of the first $100,000,000 of operating income, after adjustments and
consistent with the bonus calculations for management generally, and 1% of
any operating income that exceeded $100,000,000. These actions were based
on the 1993 changes to Section 162(m) of the Internal Revenue Code which
require that any compensation over $1,000,000 be performance-based (or
meet other exceptions provided by the Section) to be deductible by the
Company. The salary and performance-based bonus were determined pursuant
to the changes to Section 162(m) and in order to retain Mr. Peterson as
Chairman and Chief Executive Officer. The bonus method was designed to
incentivize Mr. Peterson with a performance-based bonus that was
competitive with the industry and also allows the Company to take a
deduction for federal income tax purposes.
John S. Chalsty Wendy L. Gramm John J. Jacobson, Jr.
Martin A. Massengale Michael L. Sanem JoAnn R. Smith
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN
COMPENSATION DECISIONS
The members of the Compensation Committee are Mr. Chalsty
(Chairman), Dr. Gramm, Mr. Jacobson, Dr. Massengale, Mr. Sanem and Ms.
Smith.
SUMMARY COMPENSATION TABLE (1)
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
---------------------- ---------------------
Restricted Securities
Stock Underlying All Other
Name and Principal Salary Bonus Awards Options Compensatn.
Position Year ($) ($) ($)(2) (#) ($)(3)
- - ------------------ ---- --------- --------- --------- ---------- ---------
Robert L. Peterson 1997 1,000,000 2,805,501 1,448,125 30,000 162,388
Chairman and 1996 1,000,000 3,719,696 30,000 123,732
Chief Executive 1995 1,000,000 5,278,263 60,000 176,466
Officer
Richard L. Bond 1997 469,167 288,345 70,000 35,900 19,262
President and Chief 1996 312,500 300,000 12,000 22,489
Operating Officer 1995 279,167 500,000 70,000 44,000 32,115
Eugene D. Leman 1997 301,000 195,278 50,000 17,000 12,391
President, 1996 229,167 225,900 9,000 16,492
Fresh Meats 1995 216,667 376,500 50,000 28,000 24,946
Larry Shipley 1997 144,667 148,411 140,000 16,000 5,955
President, IBP 1996 149,150 135,000 6,000 10,073
Enterprises 1995 111,683 120,000 70,000 22,880 12,854
R. Randolph
Devening (4) 1997 471,154 624,279 0 0 25,053
President and
Chief Executive 1996
Officer, Foodbrands
America, Inc. 1995
- - ------------------
(1) No other types of compensation required to be reported in the
table were paid or were payable to any of the named executive officers
and, therefore, columns which the SEC regulations created to report "Other
Annual Compensation" and "Long-Term Incentive Plan Payouts" have been
deleted from the table. IBP has not granted any SARs pursuant to the IBP
1993 Stock Option Plan and 1996 Stock Option Plan and has therefore
removed SARs from the columns of this table and reported only options.
(2) Restricted stock was granted to certain officers pursuant to
the IBP Officer Long-Term Stock Plan and the 1996 Officer Long-Term Stock
Plan. The shares typically vest five years from the date of grant
contingent upon meeting all requirements for vesting. Early vesting may
occur pursuant to the Plans' provisions due to events such as death or
total disability. The value of the shares on the date of grant is listed
for the named executive officers in the Summary Compensation Table.
Under certain past grants, and for future grants to executive officers,
the Company is obligated to pay each executive officer's mandatory minimum
Federal tax withholdings and Medicare tax portion of the Federal Insurance
Contribution Act upon vesting and receipt of the shares. Dividends paid
on the restricted stock are used to purchase additional shares of
restricted stock pursuant to the provisions of the Plans. These
additional shares are then credited to an officer's award. The number of
shares of restricted Common Stock in each named officer's account pursuant
to the IBP Officer Long-Term Stock Plan and the 1996 Officer Long-Term
Stock Plan on December 27, 1997, and the aggregate fair market value of
the shares, based upon a fiscal year-end closing price of $20.75 per
share, were as follows: Mr. Peterson - 70,000 shares valued at
$1,452,500; Mr. Bond - 26,596 shares valued at $551,867; Mr. Leman -
26,458 shares valued at $549,004; and Mr. Shipley - 24,317 shares valued
at $504,578.
(3) All Other Compensation includes 1995, 1996 and 1997 profit
sharing contributions made by the Company into the named IBP officer's
account in the IBP Retirement Income Plan ("RIP"). The profit sharing
amount attributable to each named IBP officer for 1997 is as follows: Mr.
Peterson - $40,800; Mr. Bond - $19,142; Mr. Leman - $12,281; and Mr.
Shipley - $5,902. The profit sharing and employer matching amounts
contributed by Foodbrands America, Inc. ("Foodbrands") into Mr. Devening's
401(k) account in 1997, and which are attributable to IBP, equaled
$3,982. All Other Compensation reports life insurance premiums paid by
the Company for the named officer. The amount of insurance premiums paid
by the Company, in 1997, and any cash surrender value the named IBP
officer is entitled to under a policy, is as follows: Mr. Peterson -
$51,143 ($48,210 of this amount represents the cash surrender value of a
policy and $2,933 represents the premiums paid); Mr. Bond - $120; Mr.
Leman - $110; and Mr. Shipley - $53. Foodbrands paid $21,071 in life
insurance premiums for Mr. Devening in 1997 which is attributable to IBP.
All other compensation also reports perquisites and other personal
benefits. Except for Mr. Peterson in 1997, the perquisites and other
personal benefits provided to the executive officers do not exceed the
threshold established by the SEC and are not reported in the table. The
perquisites and personal benefits for Mr. Peterson in 1997 were valued at
$70,445, and are reported in his 1997 other compensation.
(4) Mr. Devening is the President and Chief Operating Officer of
Foodbrands American, Inc. ("Foodbrands"), a subsidiary of IBP. The
acquisition of Foodbrands was completed on May 7, 1997, and IBP has not
reported any of Mr. Devening's compensation for the period prior to IBP
acquiring Foodbrands. Mr. Devening's compensation shown for 1997 are
those amounts attributable to the period in which IBP has owned
Foodbrands.
Employment Contracts
IBP has employment agreements with Messrs. Bond, Leman, and Shipley,
and Foodbrands has an employment agreement with Mr. Devening. Messrs.
Bond's, Leman's and Shipley's agreements are for a term of five years, and
Messrs. Bond's and Leman's commenced March 1, 1997 and Mr. Shipley's
commenced August 18, 1997. Each provides for a one year non-compete
obligation from the employee following the termination of employment with
IBP. The agreements provide for, among other things, a minimum base salary
and participation in IBP employee benefit plans including specifically
stock options and the long-term stock plans as an incentive to an
employee's long term commitment to IBP. For the three IBP executive
officers named in the Summary Compensation Table who currently have
employment contracts with IBP, the minimum base salaries are: Mr. Bond -
$500,000; Mr. Leman - $315,000; and Mr. Shipley - $250,000. While the
agreements terminate by their terms after five years, either party to an
agreement has the right to terminate it, subject to the non-compete
obligation, upon one year's notice.
IBP does not have termination or change of control plans or
contracts with any of its employees, except as provided for in the IBP
1987 Stock Option Plan, the IBP 1993 Stock Option Plan, the 1996 Stock
Option Plan, the IBP Officer Long-Term Stock Plan and the 1996 Officer
Long-Term Stock Plan.
Mr. Devening's agreement commenced on August 2, 1994, was amended on
December 31, 1996 and continues until December 31, 1999, subject to a one
year extension. The minimum base salary for Mr. Devening is $700,000, and,
in addition, Mr. Devening is entitled to an annual bonus based on
Foodbrands obtaining target goals for earnings before interest and taxes
("EBIT"). Mr. Devening's agreement also contains a non-compete obligation
in which Mr. Devening agrees not to compete for a period of twenty-four
(24) months after termination, and in return he will receive a payment of
$1 million dollars distributed over such twenty-four month period. In
addition, Mr. Devening's employment agreement and a stay bonus agreement
call for Foodbrands to make certain payments to Mr. Devening due to the
change of control which occurred upon IBP's acquisition of Foodbrands.
OPTION GRANTS TABLE
Option Grants in 1997 (1)
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grant Option Term (10 years)
- - ------------------------------------------------------- ----------------------
Percent
Number of of Total
Securities Options
Underlying Granted to Exercise
Options Employees or Base Expi-
Granted in Fiscal Price ration
Name (#)(2) Year (%) ($/share) Date 5%($) 10%($)
- - ------------- ---------- ---------- --------- -------- -------- ---------
Robert L.
Peterson 30,000 4.56 20.6875 12/24/08 390,308 989,116
Richard L.
Bond 14,900 2.26 23.2500 3/01/08 217,865 552,112
21,000 3.19 20.6875 12/24/08 273,215 692,381
Eugene D.
Leman 5,000 .76 23.2500 3/01/08 73,109 185,273
12,000 1.82 20.6875 12/24/08 156,123 395,647
Larry Shipley 10,000 1.52 22.6250 8/18/08 142,287 360,584
6,000 .91 20.6875 12/24/08 78,062 197,823
R. Randolph
Devening 0 0 0 - 0 0
- - ------------------
(1) All options were granted pursuant to the IBP 1993 Stock Option Plan
or 1996 Stock Option Plan. IBP has not granted any SARs pursuant to
either Plan. IBP has therefore removed SARs from the title and columns of
this table and has reported only options.
(2) The options are granted for terms of ten years and become
exercisable in increments beginning after the second and continuing
through the fifth year of the option term. All options are priced at the
fair market value of the IBP Common Stock on the date of the grant. The
options are eligible for "incentive stock option" treatment under the
applicable Internal Revenue Code provisions.
AGGREGATED OPTION EXERCISES AND YEAR-END OPTION VALUES TABLE
Aggregated Option Exercises in 1997
and 1997 Year-End Option Values (1)
Number of
Securities
Underlying
Unexercised Value of Unexercised
Shares Options at In-The-Money Options
Acquired 1997 Year-End (#) at 1997 Year-End ($)
on Value -------------------- ----------------------
Exercise Realized Exercisable Unexer- Exercisable Unexer-
Name (#) ($) cisable cisable
- - ------------- -------- --------- ----------- --------- ----------- ---------
Robert L.
Peterson (2) 200,000 3,325,000 156,000 144,000 1,084,500 338,625
Richard L.
Bond 6,800 102,468 42,376 83,644 237,199 121,777
Eugene D.
Leman (3) 8,000 131,500 57,600 52,400 502,900 97,725
Larry Shipley 0 0 16,160 38,020 77,607 37,664
R. Randolph
Devening 0 0 0 0 0 0
- - --------------------
(1) IBP has not granted any SARs pursuant to the IBP 1993 Stock Option
Plan and 1996 Stock Option Plan. IBP has therefore removed SARs from the
title and columns of this table and has reported only options granted.
(2) Of shares acquired on exercise by Mr. Peterson, 93,000 shares were
held by him and 107,000 were sold to pay the exercise price and the
associated taxes. For the value realized, IBP has reported the product of
the number of shares exercised times the difference between the closing
price of IBP Common Stock on the date of exercise and the option exercise
price.
(3) The shares acquired on exercise by Mr. Leman were held by him. For
the value realized, IBP has reported the product of the number of shares
exercised times the difference between the closing price of IBP Common
Stock on the date of exercise and the option exercise price.
PERFORMANCE GRAPH
The following performance graph compares the registrant's stock
performance over the past five years against the performance of both an
equity market index and a peer group index that cover the same five year
period.
IBP, inc.
Comparison of Five Year Cumulative Total Return
IBP, inc., S&P 500 Index and S&P 400 Index
1992 1993 1994 1995 1996 1997
------ ------ ------ ------ ------ ------
IBP, inc. 100.00 131.40 157.77 264.71 251.31 219.33
S&P 500 100.00 108.52 109.78 151.03 189.51 252.74
S&P 400 100.00 113.28 111.52 146.03 172.08 227.59
- - --------------------
(1) Assumes $100 invested on December 24, 1992 in IBP, inc. Common
Stock, the S&P 500 Index, and the S&P 400 Index. Each of the three
measures of cumulative total return assumes reinvestment of dividends.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who beneficially
own more than ten percent of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission ("SEC") and the New York Stock
Exchange. Executive officers, directors and greater than ten-percent
stockholders are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file.
In 1997, the Company determined that grants made to all of the
executive officers under the long-term stock plans, which grants were made
in 1992 and subsequent years, should have been reported as derivative
securities when granted even though the officers have no rights to the
stock until vesting (typically five years after grant). The executive
officers reported the grants as derivative securities on Form 4's filed
for October 1997, which report of grants would be considered a late
filing. For the fiscal year ending December 27, 1997, based solely on
review of the copies of such forms furnished to the Company, or written
representations that forms were not required, the Company believes there
was timely compliance with all other Section 16(a) filing requirements
applicable to its executive officers, directors and greater than ten-
percent beneficial owners.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Audit Committee of the Board of Directors of IBP selected
Coopers & Lybrand L.L.P. as independent public accountants to audit the
consolidated financial statements of IBP and its consolidated subsidiaries
for fiscal year 1997. Coopers & Lybrand L.L.P. has audited IBP's
financial statements annually since 1995.
During IBP's two most recent fiscal years there had been no
disagreements with IBP's accountants on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope
or procedure, nor has the principal accountant's reports on IBP's
financial statements for either of the past two years contained any
adverse opinion or disclaimer of opinion, qualification or modification as
to uncertainty, audit scope or accounting principles.
A member of Coopers & Lybrand L.L.P. is expected to be present at
the annual meeting of stockholders. Such member will have an opportunity
to make a statement if so desired and will be available to respond to
appropriate questions.
INCORPORATION BY REFERENCE
The financial information, supplementary financial information and
management's discussion and analysis are incorporated by reference into
this proxy statement from the 1997 Annual Report to Stockholders, a copy
of which has been delivered with this proxy statement.
OTHER MATTERS
The Board of Directors is not aware of any other matters to be
presented at the meeting. However, if any such matters are presented for
action, it is the intention of the proxy holders named in the enclosed
proxy card to vote in accordance with their discretion on such matters
unless stockholders specify otherwise.
By Order of the Board of Directors
/s/ Sheila B. Hagen
- - ---------------------
Sheila B. Hagen
Secretary
PROXY CARD
- - ----------
If no direction is given, this proxy will be voted FOR Item 1.
The Board of Directors Recommends a Vote FOR Item 1.
Item 1 - Election of directors duly nominated.
For Withheld Richard L. Bond, John S. Chalsty, Wendy L.
Gramm, John J. Jacobson, Jr., Eugene D. Leman,
- - ------- ------ Martin A. Massengale, Robert L. Peterson,
Michael L. Sanem, JoAnn R. Smith and
Dale C. Tinstman
To withhold authority to vote for any individual nominee, write that
nominee's name on the line below)
__________________________________________________________
Please mark, date and sign as your name appears below and return in the
enclosed envelope. If acting as executor, administrator, trustee, guardian,
etc., you should indicate when signing. If the signer is a corporation or
partnership, please sign in full corporate or partnership name, by President,
authorized officer or authorized partner. If shares are held jointly, each
shareholder named should sign.
Date _____________________________________
Signature_________________________________
Signature_________________________________
____________________________________________________________________________
FOLD AND DETACH HERE
Annual Meeting
of
IBP, inc.
Thursday, April 23, 1998
Agenda
------
* Election of Directors
* Transaction of other business properly brought before the
meeting or any adjournment thereof
PROXY
- - ----------------------------------------------------------------------------
SOLICITED BY THE BOARD OF DIRECTORS for Annual Meeting of Stockholders
IBP, inc.
Corporate Headquarters
Training Room
IBP Avenue
Dakota City, Nebraska 68731
THURSDAY, APRIL 23, 1998 - 3:00 P.M.
The undersigned stockholder hereby appoints Robert L. Peterson and Sheila
B. Hagen, or either of them, the proxies of the undersigned to vote, as
indicated on the reverse side, all shares registered in the name of the
undersigned on all matters which may come before the 1998 Annual Meeting of
Stockholders of IBP,inc. or any adjournment thereof.
The shares represented by this proxy will be voted as directed by the
stockholder. If no direction is given such shares will be voted for Item 1,
and in accordance with the discretion of the persons named as proxies on all
other business.
____________________________________________________________________________
FOLD AND DETACH HERE
Annual
Meeting of Stockholders
April 23, 1998
In order to assure a quorum, all stockholders are urged to vote by proxy or
attend the meeting. However, whether or not you expect to attend, we urge
you to read the accompanying Proxy Statement and then complete, sign, date
and return the proxy card in the enclosed postage prepaid envelope. It is
important that your shares be represented at the meeting. Your promptness
will assist us in preparing for the meeting and avoiding the cost of a
follow-up mailing. If you receive more than one proxy card because you own
shares registered in different names or at different addresses, each proxy
card should be completed and returned.
